What is "duty to defend" in liability insurance?

In liability insurance, the concept of "duty to defend" is fundamental and refers specifically to the insurer's obligation to provide legal defense for the insured against covered claims. This means that when an insured party is faced with a lawsuit or legal action that falls within the coverage parameters of their policy, the insurance company is responsible for hiring and paying for legal counsel on behalf of the insured.

This duty to defend is broader than the insurer's duty to indemnify, which involves paying for damages or settlements resulting from a covered claim. The insurer must defend the insured as long as there is a potential for coverage, even if the allegations in the lawsuit are unfounded or if the claim ultimately turns out not to be covered by the policy.

In essence, this obligation underscores the protective nature of liability insurance—ensuring that the insured does not have to bear the financial burden of fighting legal battles alone, thus affording peace of mind in potentially high-stakes situations. The insurer's duty to defend can arise even before any determination of liability is made, reflecting a proactive approach to legal risks associated with insurance coverage.